Arizona Supreme Court allows cuts to AHCCCS to stand

Enrollment cap may affect 100,000 poor

The Arizona Supreme Court on Wednesday declined to review an appeal challenging cuts to the state's Medicaid program, letting stand an enrollment freeze that has locked thousands of poor residents out of government-paid health insurance.

An estimated 100,000 childless adults will lose Arizona Health Care Cost Containment System coverage this fiscal year. The state has turned away an untold number since a lower-court judge allowed the cap to take effect in July.

The high court's decision effectively ends the case, which centers on a 2000 voter- approved measure that expanded the AHCCCS population. However, it lets stand an Appeals Court ruling that effectively said the budget cuts violated the measure, Proposition 204, but the court couldn't force the Legislature to obey the law.

The court decisions raise questions about how much room legislators have to interpret ballot measures.

"To have the courts saying the Legislature is acting improperly, actually unconstitutionally, but we're not going to do anything about it? That's a fairly surprising situation," said Arizona State University law professor and constitutional expert Paul Bender. "It's another step in the court and the Legislature frustrating the power of the people to make law in Arizona."

The enrollment cap was part of $500 million in cuts to AHCCCS, part of a budget-balancing package approved by Gov. Jan Brewer and lawmakers last year.

Attorneys for low-income Arizonans sued to block the cap, which will save an estimated $190 million this fiscal year, arguing that it violated Proposition 204, which expanded coverage to include everyone below the poverty level. In addition, they said the action violated a constitutional amendment that prevents legislators from tinkering with ballot measures.

Maricopa County Superior Court Judge Mark Brain refused to block the enrollment cap in July, saying Prop. 204 didn't require lawmakers to pay for the voter-approved expansion of the program.

In December, the Arizona Court of Appeals upheld his ruling, saying it could not force lawmakers to provide funds because of the way the proposition was written.

Prop. 204 initially relied on tobacco-settlement dollars as the primary source of funding, but required that it "shall be supplemented, as necessary, by any other available sources."

Attorneys for Brewer and AHCCCS argued that the reference to "available sources" gave them authority to cut AHCCCS, which serves 1.3 million people and saw dramatic growth since the economy faltered.

Attorney Tim Hogan brought the case on behalf of eight people with a host of medical conditions, three of them homeless, who had been denied health care. He said Wednesday that the case was over.

"It's extremely disappointing," said Hogan, of the Arizona Center for Law in the Public Interest. "I don't know how you can say this is a mandatory requirement, and then say we can't enforce it."

Brewer and lawmakers have maintained that AHCCCS was unsustainable, and that any attempt to force them to fund the Prop. 204 population usurped their budget-writing authority.

"I commend the Arizona Supreme Court for deciding not to hear this case that challenged the constitutional authority of elected officials to manage the state's budget," the governor said in a statement.

"I am mindful that these reforms have real impacts for Arizonans," Brewer said. "But I am encouraged that our actions have preserved this critical segment of Arizona's safety net while remaining true to the provisions of Proposition 204 -- as validated by the Maricopa County Superior Court, Arizona Court of Appeals and, now, the Arizona Supreme Court."

Kathy Byrne CEO of El Rio Community Health Center in Tucson, which was a plaintiff in the lawsuit, said her facility is treating a growing number of uninsured patients. Many wait longer to seek care, and often their only option is a hospital emergency room -- the most expensive care available.

"They will come into the emergency department with significant illness. And it's at a point where it's much harder to get them healthy again," she said. "It's really hard on patients and really hard on the health-care system."

Federal health-care reform will cover this population, beginning in 2014, by expanding Medicaid coverage to people earning up to 133 percent of the federal poverty level, which is $14,856 for a single person.

But Byrne said health-care providers, and patients, are in trouble now. She hopes to revive a proposal from hospitals to raise money through a so-called "bed tax" and trigger additional federal Medicaid funds.

"I think this is significantly impacting hospitals' financial sustainability, particularly in rural communities," she said. "We just haven't yet seen what the fallout is of taking billions of dollars out of the health-care system in Arizona."